Page 1
African Bank Holdings Limited
Consolidated
Unaudited Condensed Interim Financial Statements
for the six months ended 31 March 2017
These financial statements were prepared under the supervision of the
Chief Financial Officer, G Raubenheimer CA (SA)
Registration number: 2014/176855/06
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AFRICAN BANK HOLDINGS LIMITED
CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
for the six months ended 31 March 2017
1
Contents Page
Director’s responsibility statement 2
Condensed statement of financial position 3
Condensed statement of comprehensive income 4
Condensed statement of changes in equity 5
Condensed statement of cash flows 6
Annexures to the consolidated condensed interim financial statements
Notes to the condensed interim financial statements 7
Page 3
2
STATEMENT OF RESPONSIBILITY BY THE BOARD OF DIRECTORS
The directors are responsible for the preparation and fair presentation of the interim financial statements, comprising the
statement of financial position at 31 March 2017, the statement of total comprehensive income, the statement of changes in
equity, and the statement of cash flows for the six months ended 31 March 2017, and the selected notes to the financial
statements, which include a summary of significant accounting policies and other explanatory notes, in accordance with
International Financial Reporting Standards and the requirements of the Companies Act of South Africa.
The directors’ responsibility includes:
designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of these
financial statements that are free from material misstatement, whether due to fraud or error;
selecting and applying appropriate accounting policies;
making accounting estimates that are reasonable in the circumstances; and
maintaining adequate accounting records and an effective system of risk management.
The directors have made an assessment of the company’s ability to continue as a going concern and have no reason to believe
the business will not be a going concern in the year ahead.
These financial statements are not audited.
Approval of the financial statements
The financial statements set out on pages 3 to 15 were approved by the board of directors and signed on its behalf on
19 May 2017 by:
B Riley G Raubenheimer Director Director
Midrand
A signed copy of the interim financial statements is available for inspection at the registered office.
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AFRICAN BANK HOLDINGS LIMITED
CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
3
CONDENSED STATEMENT OF FINANCIAL POSITION as at 31 March 2017
R million
%
change
Unaudited
As at
31 March 2017
Audited
As at
30 Sept 2016
Assets
Cash and cash equivalents (23) 9 950 12 864
Statutory assets >100 3 009 1 237
Derivatives (77) 518 2 230
Net advances (2) 19 701 20 111
Accounts receivable and other assets 3 238 232
Investment in insurance contracts 89 594 314
Property and equipment (14) 478 553
Intangible assets 78 87 49
Deferred tax >100 320 121
Total assets (7) 34 895 37 711
Liabilities and equity
Short-term funding (82) 393 2 159
Derivatives - 4 4
Creditors and other liabilities (62) 488 1 286
Current tax 41 140 99
Bonds and other long-term funding (2) 23 706 24 313
Subordinated bonds, debentures and loans - 1 527 1 528
Total liabilities (11) 26 258 29 389
Ordinary share capital - 5 5
Ordinary share premium - 9 995 9 995
Reserves and accumulated losses (19) (1 363) (1 678)
Total equity (capital and accumulated losses) 4 8 637 8 322
Total liabilities and equity (7) 34 895 37 711
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AFRICAN BANK HOLDINGS LIMITED
CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
4
CONDENSED STATEMENT OF COMPREHENSIVE INCOME for the six months ended 31 March 2017
R million
%
change
Unaudited
6 months ended
31 March 2017
Unaudited
6 months ended
31 March 2016
Interest income on advances 2 610 -
Credit impairment charge (1 058) -
Interest after impairment 1 552 -
Other interest income >100 439 6
Interest expense and similar charges >100 (1 466) (2)
Net interest income after impairment 525 4
Non- interest income 785 -
Remeasurement of insurance contracts 280 -
Operating costs (1 217) -
Gains on bond buy backs 11 -
Indirect taxation: VAT (39) -
Operating profit >100 345 4
Goodwill impairment - -
Profit before taxation >100 345 4
Taxation >100 (30) (1)
Profit for the period >100 315 3
Attributable to:
Owners of African Bank Holdings Limited
Total comprehensive income for the six months 315 3
*The Group has no other comprehensive income for the reporting period.
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AFRICAN BANK HOLDINGS LIMITED
CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
5
CONDENSED STATEMENT OF CHANGES IN EQUITY for the six months ended 31 March 2017
R million
Ordinary
share capital
Ordinary
share
premium
Accumulated
Profit/ (loss) Total
Balance at 30 September 2015 (audited) - - - -
Ordinary shares issued 5 9 995 - 10 000
Total comprehensive profit for the period - - 3 3
Balance at 31 March 2016 (unaudited) 5 9 995 3 10 003
Total comprehensive (loss) for the period - - (1 681) (1 681)
Balance at 30 September 2016 (audited) 5 9 995 (1 678) 8 322
Total comprehensive profit for the period - - 315 315
Balance at 31 March 2017 (unaudited) 5 9 995 (1 363) 8 637
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AFRICAN BANK HOLDINGS LIMITED
CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
6
CONDENSED STATEMENT OF CASH FLOWS for the six months ended 31 March 2017
R million
Unaudited
6 months to
March 2017
Unaudited
6 months to
March 2016
Cash flows from operating activities
Cash generated from operations 1 713 7
Cash received from lending activities and cash reserves 3 824 7
Recoveries on advances previously written off 247 -
Cash paid to clients, funders, employees and agents (2 358) -
Increase in gross advances (865) -
Increase in statutory assets (1 676) -
Increase in customer deposits 62 -
Direct taxation paid (189) -
Indirect taxation paid (39) -
Net cash (outflow) / inflow from operating activities (994) 7
Cash outflow from investing activities (33) (110)
Acquisition of property and equipment (23) -
Acquisition of intangible assets (10) -
Investment in insurance contracts - (110)
Cash (outflow) / inflow from financing activities (1 875) 10 110
Long term funding raised / (redeemed) (664) 110
Net short- term funding redeemed (1 211) -
Share capital issued for cash - 10 000
(Decrease) / Increase in cash and cash equivalents (2 902) 10 007
Cash and cash equivalents at the beginning of the year 12 864 -
Effect of exchange rate changes on cash and cash equivalents (12) -
Cash and cash equivalents at the end of the period 9 950 10 007
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AFRICAN BANK HOLDINGS LIMITED
CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
7
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
1. General information
African Bank Holdings Limited (“ABHL”) is a public company incorporated in the Republic of South Africa. ABHL is an
unlisted registered bank controlling company under the Banks Act, Act 94 of 1990. The shares in ABHL are privately held
by the South African Reserve Bank, the Government Employees Pension Fund, Absa Trading and Investments Solutions
(Proprietary) Limited, Nedbank Limited, FirstRand Bank Limited, Investec Bank Limited, The Standard Bank of South
Africa Limited and Capitec Bank Limited.
The company’s 100% held subsidiary African Bank Limited on 4 April 2016 entered into a restructuring transaction of the
entity formerly known as African Bank Limited (in curatorship). That entity has formally changed its name to “Residual
Debt Services Limited (in curatorship)”.
The details of the restructuring transaction can be found in the Offer Information Memorandum published on
4 February 2016 as well as in the SENS announcements available on www.africanbank.co.za.
The company also holds 100% of the issued share capital of African Insurance Group Limited. Its main business is holding
an investment in a cell captive structure provided by Guardrisk Insurance Company Limited (“Guardrisk”).
ABHL and its subsidiaries constitute the African Bank Holdings group of companies (“the Group”). The Group’s main
business is providing unsecured personal loans.
2. Basis of preparation
The condensed interim financial information has been prepared in accordance with the framework concepts and the
measurement and recognition requirements of the International Financial Reporting Standards (IFRS) adopted by the
International Accounting Standards Board (IASB), Interpretations issued by the International Financial Reporting
Interpretations Committee (IFRIC) of the IASB, IAS 34 - Interim Financial Reporting, the South African Institute of
Chartered Accountants (SAICA), Financial Reporting Guides as issued by the Accounting Practices Committee (APC) and
the Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council and the requirements of
the Companies Act of South Africa (Act 71 of 2008).
The condensed interim financial statements have been prepared on a going concern basis which contemplates the continuity
of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business. The
Group is using the historical cost basis as modified by the fair value accounting of certain assets and liabilities where
required or permitted by IFRS.
3. Accounting policies
These condensed interim financial statements should be read in conjunction with the 2016 annual financial statements,
which were prepared in accordance with IFRS. The accounting policies are consistent with those reported in the previous
year except as required in terms of the adoption of the following amendments effective for the current period:
IFRS 5 – Non-current Assets Held for Sale and
Discontinued Operations
IFRS 7 – Financial Instruments: Disclosures
IFRS 10 – Consolidated Financial Statements
IFRS 11 – Joint Arrangements
IFRS 12 – Disclosure of Interests in Other Entities
IFRS 14 – Regulatory Deferral Accounts
IAS 1 – Presentation of Financial Statements
IAS 16 – Property, Plant and Equipment
IAS 19 – Employee Benefits
IAS 27 – Separate Financial Statements
IAS 28 – Investments in Associates and
Joint Ventures
IAS 34 – Interim Financial Statements
IAS 38 – Intangible Assets
IAS 41 – Agriculture
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AFRICAN BANK HOLDINGS LIMITED
CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
8
3. Accounting policies (continued)
The abovementioned amendments to the IFRS standards did not have any effect on the Group’s financial results or
disclosures and had no impact on the Group’s accounting policies with exception for the following amendments:
The amendments to IAS 1 clarified rather than significantly changed the existing IAS 1 requirements around
materiality, order of presentation and disaggregation of the specific line items in the statement of profit or loss and
other comprehensive income and the statement of financial position.
The amendments to IAS 34, clarifying the meaning and the requirements for the disclosure of information “elsewhere
in the interim financial report” were applied by the Group for the current financial period.
4. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group’s accounting policies management are required to make judgements, estimates and
assumptions about income, expenses and the carrying amounts of assets and liabilities that are not readily apparent from
other sources. The estimates and associated assumptions are based on the historical experience and other factors that are
considered to be relevant. Due to the inherent uncertainty in making estimates, actual results reported in future periods may
be based upon amounts which differ from those estimates, judgements and assumptions.
In preparing these condensed interim financial statements, the significant judgements made by the management in applying
the Group’s accounting policies and key sources of estimation uncertainty were the same as those that applied to the annual
financial statements for the year ended 30 September 2016.
5. Advances and credit risk disclosures
The impairment provisions for gross advances are classified into three categories, namely specific impairment, portfolio
specific impairment and incurred but not reported (IBNR) provisions.
31 March 2017
Rmillion Loan Credit card Total
Financial assets that are neither past due nor specifically
impaired
CD 0 12 006 2 467 14 473
Financial assets that are past due and specifically impaired
CD 1 to CD 3 1 573 1 603 3 176
CD 4 and higher 2 751 854 3 605
Total credit exposure 16 330 4 924 21 254
Total impairments (971) (485) (1 456)
Incurred but not reported (IBNR) (323) (74) (398)
Portfolio specific impairment (392) (241) (632)
Specific impairment (256) (170) (426)
Deferred administration fees (97) (97)
Net advances 15 262 4 439 19 701
Fair value 19 767
Conditional revocable retail loan commitments as at 31 March 2017 amounted to R788 million
(30 September 2016: R822 million).
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AFRICAN BANK HOLDINGS LIMITED
CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
9
5. Advances and credit risk disclosures (continued)
30 September 2016
Rmillion Loan Credit card Total
Financial assets that are neither past due nor specifically
impaired
CD 0 11 197 2 478 13 675
Financial assets that are past due and specifically impaired
CD 1 to CD 3 1 391 1 477 2 868
CD 4 and higher 3 026 989 4015
Total credit exposure 15 614 4 944 20 558
Total impairments (321) (41) (362)
Incurred but not reported (IBNR) (173) (16) (189)
Portfolio specific impairment (124) (22) (146)
Specific impairment (24) (3) (27)
Deferred administration fees (85) - (85)
Net advances 15 208 4 903 20 111
Fair value 20 056
6. Interest income
7. Non- interest income
8. Interest expense and similar charges
6 months ended
31 March 2017
6 months ended
31 March 2016
Rmillion
Interest income on advances 2 610 -
Interest on advances 2 436 -
Loan origination fees 48 -
Service fee 126 -
Other interest income 439 6
Interest received on cash reserves 439 6
3 049 6
Rmillion 6 months ended
31 March 2017
6 months ended
31 March 2016
Credit card fees 190 -
Binder and outsourcing arrangements fees 215 -
Collection fees 378 -
Other income 2 -
785 -
Rmillion 6 months ended
31 March 2017
6 months ended
31 March 2016
Subordinated debt 109 -
Unsecured listed bonds 667 -
Call deposits 51 -
Fixed deposits 183 -
Negotiable certificates of deposit 14 -
Interest on short-term facilities 225 -
Interest expense and similar charges from financial instruments measured at
fair value through profit or loss 209 -
Other interest 8 2
1 466 2
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AFRICAN BANK HOLDINGS LIMITED
CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
10
9. Cash received from lending activities and cash reserves
10. Fair value disclosures
10.1. Valuation models
The fair value of financial assets and financial liabilities that are traded in active markets are based on quoted market prices
or dealer price quotations. For all other financial instruments, the Group determines fair values using other valuation
techniques.
The Group measures fair value using the following fair value hierarchy, which reflects the significance of the inputs used in
making the measurements.
Level 1 fair value measurements are those derived from quoted market prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted market prices included within Level 1
that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable inputs).
10.2. Valuation techniques
Valuation techniques include net present value and discounted cash flow models, comparison with similar instruments for
which market observable prices exist and other valuation models. Assumptions and inputs used in valuation techniques
include risk free and benchmark interest rates, credit spreads and other factors used in estimating discounting rates, foreign
currency exchange rates, bond and equity prices, equity and equity index prices and expected price volatilities and
correlations.
The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that would be received
to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement
date.
Recurring fair values
The Group currently measures and presents derivative assets and derivative liabilities at fair value, all other financial
instruments are measured and presented at amortised cost. The Group uses widely recognised valuation models for
determining the fair value of common and more simple financial instruments, such as interest rate and currency swaps
that use only market data and require little management judgement and estimation. Observable prices or model inputs are
usually available in the market for listed debt and equity securities, exchange traded derivatives and simple over-the-
counter derivatives such as swaps. Availability of observable market prices and model inputs reduces the need for
management judgement and estimation and also reduces the uncertainty associated with determining fair values.
Availability of observable market prices and inputs varies depending on the products and markets and is prone to changes
based on specific events and general conditions in the financial markets. Fair value estimates obtained from models
reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Group and the
counterparty where appropriate.
6 months ended
31 March 2017
6 months ended
31 March 2016
Interest income (adjusted for non-cash items) 3 033 -
Non-interest income (adjusted for non-cash items) 791 -
3 824 -
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AFRICAN BANK HOLDINGS LIMITED
CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
11
10. Fair value disclosures (continued)
10.2. Valuation techniques (continued)
Fair value for disclosure
For instruments measured and presented at amortised cost, in determining the fair value for disclosure purposes, the
Group uses its own valuation models, which are usually developed from recognised valuation models. Some or all of the
significant inputs into these models may not be observable in the market, and are derived from market prices or rates or
are estimated based on assumptions. Examples of instruments involving significant unobservable inputs include advances
and certain funding loans for which there is no active market. Valuation models that employ significant unobservable
inputs require a higher degree of management judgement and estimation in the determination of fair value. Management
judgement and estimation are usually required for selection of the appropriate valuation model to be used, determination
of expected future cash flows on the financial instrument being valued, determination of the probability of counterparty
default and selection of appropriate discount rate.
Fair value estimates obtained from models include adjustments to take account of the credit risk of the Group and the
counterparty where appropriate.
General
Model inputs and values are calibrated against historical data and published forecasts and, where possible, against current
or recent observed transactions and experiences. This calibration process is inherently subjective and it yields ranges of
possible inputs and estimates of fair values, and management judgement is required to select the most appropriate point in
the range.
10.3. Valuation framework
The Group has an established control framework with respect to the measurement of fair values. This framework includes
formalised policies and the approval and review process.
When third party information is used to measure fair value the following procedures are performed in order to ensure that
valuations meet the requirements of IFRS:
verifying that the third party is approved for use in pricing the relevant type of financial instrument; and
understanding how the fair value has been arrived at and the extent to which it represents actual market transactions.
10.4. Fair value measurements recognised in the statement of financial position
The following table provides an analysis of financial instruments that are measured at fair value at the reporting date, by the
level in the fair value hierarchy into which the fair value measurement is categorised. The amounts are based on the values
recognised in the statement of financial position.
Rmillion Level 1 Level 2 Level 3 Total
31 March 2017
Financial assets
Derivative instruments - 518 - 518
Total - 518 - 518
Financial liabilities
Derivative instruments - 4 - 4
Total - 4 - 4
Rmillion Level 1 Level 2 Level 3 Total
30 September 2016
Financial assets
Derivative instruments - 2 230 - 2 230
Total - 2 230 - 2 230
Financial liabilities
Derivative instruments - 4 - 4
Total - 4 - 4
There were no transfers between levels of the fair value hierarchy.
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AFRICAN BANK HOLDINGS LIMITED
CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
12
10.5. Valuation techniques, significant unobservable inputs and sensitivity of level 2 financial instruments measured
at fair value
The table below indicates the valuation techniques and main assumptions used in the determination of the fair value of the
level 2 assets and liabilities for which fair value is measured:
31 March 2017
(unaudited)
Valuation basis /
techniques Main assumptions
Variance in fair
value
measurement
Effect on
profit / (loss)
(after tax)
Rmillion
Assets
Cross-currency interest
rate swaps Discounted cash flow Discount rates 10% in spot rate 239
Interest rate swaps Discounted cash flow Discount and risk free rates 100 bps (27)
Liabilities
Interest rate swaps Discounted cash flow Discount and risk free rates 100 bps 4
30 September 2016
(audited)
Valuation basis /
techniques Main assumptions
Variance in fair
value
measurement
Effect on
profit / (loss)
(after tax)
Rmillion
Assets
Cross-currency interest
rate swaps Discounted cash flow Discount rates 10% in spot rate 632
Interest rate swaps Discounted cash flow Discount and risk free rates 100 bps (39)
Liabilities
Interest rate swaps Discounted cash flow Discount and risk free rates 100 bps 6
10.6. Assets and liabilities for which fair value is disclosed*
Rmillion Level 1 Level 2 Level 3 Total
Carrying
value
31 March 2017
Financial assets
Government bonds - 1 489 - 1 489 1 504
Treasury bills and debentures - 1 128 - 1 128 1 128
Deposits with South African Reserve Bank - 377 - 377 377
Net advances - - 19 767 19 767 19 701
Total - 2 994 19 767 22 761 22 710
Liabilities
Financial liabilities
Short term funding - 244 149 393 393
Unsecured bonds (listed on JSE) - 9 569 - 9 569 9 588
Unsecured bonds (listed on foreign stock
exchange) - 5 484 - 5 484 5 525
Unsecured long- term loans - 8 281 - 8 281 8 106
Unlisted bonds - 325 - 325 347
Subordinated bonds, debentures and loans - 1 534 - 1 534 1 527
Other long term funding - - 140 140 140
Total - 25 437 289 25 726 25 626
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AFRICAN BANK HOLDINGS LIMITED
CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
13
10.6. Assets and liabilities for which fair value is disclosed* (continued)
Rmillion Level 1 Level 2 Level 3 Total
Carrying
value
30 September 2016
Financial assets
Government bonds - 470 - 470 466
Treasury bills and debentures - 397 - 397 397
Deposits with South African Reserve Bank - 374 - 374 374
Net advances - - 20 056 20 056 20 111
Total - 1 241 20 352 21 593 21 644
Liabilities
Financial liabilities
Short term funding - 2 159 - 2 159 2 159
Unsecured bonds (listed on JSE) - 9 556 - 9 556 9 444
Unsecured bonds (listed on foreign stock
exchange)
- 5 781 - 5 781 5 754
Unsecured long- term loans - 8 783 - 8 783 8 786
Unlisted bonds - 330 - 330 329
Subordinated bonds, debentures and loans - 1 535 - 1 535 1 528
Total - 28 144 - 28 144 28 000
*The following items fair value is not disclosed as these assets and liabilities closely approximate their carrying amount due
to their short term or on demand repayment terms:
− Cash and cash equivalents;
− Accounts receivables and other assets;
− Creditors and accruals.
The fair value of listed bonds reflects the current listed price at year end, but is categorised level 2 due to the lack of market
liquidity for the listed bonds.
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AFRICAN BANK HOLDINGS LIMITED
CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
14
11. Investment in insurance contracts
Rmillion
Unaudited
March 2017
Audited
September 2016
African Insurance Group Limited Cell No. 00124
Initial investment 281 281
Re-measurement of investment in insurance contracts 313 33
Carrying value as at 594 314
Re-measurement of investment in insurance contracts
Opening balance 33 -
Net premiums earned 280 33
Premium earned 911 1 104
Claims costs (327) (385)
Investment income 34 24
Fees and commission paid (194) (226)
Actuarial movements (9) (440)
Taxation (135) (44)
Distributions paid to cell shareholders - -
Closing balance 313 33
The group has entered into a cell captive arrangement whereby the group as cell shareholder is able to sell insurance products
under its own brand. Guardrisk is the principle to the insurance contact, although the business is underwritten on behalf of the
group as cell shareholder. Under this arrangement Guardrisk undertakes the professional insurance and financial management
of the cell, including functions related to underwriting, reinsurance, management of claims, actuarial and statistical analyses
and investment and accounting services.
Insurance risk is the possibility that the insured event occurs and that benefit payments and expenses exceed the carrying
amount of the insurance liabilities. Insured events are random and the actual number and amount of claims and benefits will
vary from year to year. Statistically, the larger the portfolio of similar insurance contracts, the smaller the relative variability of
the expected outcome will be. Similarly, diversification of the portfolio with respect to risk factors reduces insurance risk.
Guardrisk is responsible for evaluating all retention of risks in terms of statistical and underwriting disciplines, under the
mandate set for the cell arrangement.
Factors that aggravate insurance risk include those arising from a lack of risk diversification in terms of type and amount of
risk, geographical area and specific industries covered. The group sells not only credit and life insurance products, but also
funeral policies which introduces diversification into the portfolio.
The group manages these risks through its agreement with Guardrisk. The main risks to which the group is exposed include:
Mortality, and morbidity risks (the risk that actual experience in respect of the rates of mortality and morbidity may be
higher than that assumed in pricing and valuation varies, depending on the terms of different products);
Contract persistency risk (the risk that policyholders may cease or reduce their contributions or withdraw their benefits
and terminate their contracts prior to the contractual maturity date of a contract);
Expense risk (there is a risk that the group may experience a loss due to actual expenses being higher than that assumed
when pricing and valuing policies); and
Business volume risk (the risk that the group may not sell sufficient volumes of new business to meet the expenses
associated with distribution and administration).
These risks are mitigated through the cell captive arrangement with Guardrisk, which is experienced in the professional
insurance and financial management of insurance contracts, and has a proven track record that the group has determined can
be relied upon.
In determining the value of insurance liabilities, assumptions need to be made regarding future rates of mortality and
morbidity, termination rates, expenses and investment performance. The uncertainty of these rates may result in actual
experience being different from that assumed and hence actual cash flows being different from those projected. In the extreme,
actual claims and benefits may exceed the liabilities. The risk is mitigated to an extent through the addition of compulsory and
discretionary margins, specifically where there is evidence of moderate or extreme variation in experience and the extensive
use of reinsurance.
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AFRICAN BANK HOLDINGS LIMITED
CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
15
12. Related parties balances and transactions
African Bank Limited has granted a revolving loan facility to its holding company, African Bank Holdings Limited. The
highest balance during the period was R312_million (2016: R296 million). The loan is unsecured, repayable on 20 business
days’ notice and subject to interest at JIBAR plus 320 basis points. The outstanding loan balance as at 31 March 2017 is
R312 million (2016: R296 million).
13. Contingent liabilities and commitments
The outstanding conditionally revocable loan commitments are disclosed as part of the credit risk disclosure. There were no
significant changes in other contingent liabilities and commitments compared to those disclosed in 2016 annual financial
statements.
14. Events after the reporting period
There were no material matters or circumstances arising since the reporting period end, not otherwise dealt with in these
condensed interim financial statements, which significantly affects the financial position as at 31 March 2017 or the results
of its operations or cash flows for the six months then ended.
15. Reclassification of certain amounts in the statement of cash flows
African Bank Limited, a wholly owned subsidiary of African Bank Holdings Limited, commenced its business on
4 April 2016 by acquiring an impaired advances portfolio in terms of the restructuring of the entity currently known as
Residual Debt Services Limited (in Curatorship) - the entity previously known as African Bank Limited. The IFRS
requirements around accounting for an impaired advance portfolio are complex and management is continuously striving to
improve the disclosures for this portfolio.
In the current financial period African Bank Limited has reconsidered the way in which certain cash flows attributable to
the acquired portfolio are classified within the statement of cash flows. Instead of being classified as part of the cash flows
from lending activities, such cash flows will be classified within cash flows attributable to the movement in gross
advances. The revised classification has been applied in these interim financial statements and could result in a restatement
to the statement of cash flows for September 2016 being restated on the above mentioned basis.
16. Other matters
During the reporting period, funding with the face value R664 million was bought back by African Bank Limited. There
were no other material debt instruments issued or settled during the period.
There were no material acquisitions or disposals of property and equipment or intangible assets during the reporting period.
No impairment losses were recognised in connection with items of property and equipment, intangible assets or financial
assets other than advances.
There were also no changes in authorised or issued share capital of ABHL during the first six months of the 2017 financial
year.